HSBC’s profits up 10% despite £731m redress

HSBC’s half-year profits are up 10 per cent at £8.7bn as it sets aside £731m to deal with a raft of ongoing regulatory investigations.

The bank posted a pre-tax profit of £7.9bn at the same time last year.

Its interim results, published last week, reveal HSBC has made a provision of £731m to cover “settlements and provisions in connection with legal matters”.

The bank is subject to an FCA past-business review of its anti-money laundering systems and controls, and has already made payments totalling £1.2bn to US authorities related to not complying with anti-money laundering rules in the past. 

HSBC says it is also co-operating with global authorities over allegations that its Swiss private banking arm helped clients evade tax. Other live investigations include reviews into the manipulation of benchmark rates such as Libor and foreign exchange rates, as well as claims over fixing the price of precious metals.

The bank is in the process of setting up a ring-fenced retail bank. The new retail headquarters will be based in Birmingham and should be completed by 2018.

HSBC says it has started “detailed work” on reviewing where to base its global headquarters, which is expected to be concluded by the end of the year.

Last month, the bank expanded its broker panel nine months after entering the intermediary market. The lender now also distributes its mortgages through London & Country, with the brokerage having access to its entire range to 90 per cent LTV.

In October last year, the lender made a shock U-turn in its distribution strategy by entering the broker market, piloting a range with Countrywide.